Tesco would like to thank HM Government and the Bank of England. Their funding-for-lending scheme, says the supermarket, has allowed it to "break the 2% barrier" on mortgages. Specifically, if you want to borrow 60% or less of the mortgage valuation of your house, Tesco's rates start at 1.99% fixed for two years.
Good news if you have built up a lot of equity in your house, or are a first-time buyer with a hefty deposit. But was the much hyped funding-for-lending scheme really designed to benefit housebuyers who could already access mortgages at historically low rates?
In July, the Bank said: "Easier access to cheaper bank borrowing should boost spending in the economy, for example by allowing families to purchase homes, or by allowing firms to finance investment in new and productive enterprises."
Cheaper 60% loan-to-value mortgages will serve the first ambition modestly. But the best way to help struggling first-time buyers – which is where the logjam in the market lies – would be to build more houses. As for productive investment by firms, let's hope the Bank produces some statistics on how much is being financed through the funding-for-lending scheme. Residential mortgages for the already creditworthy, one suspects, will dominate.
